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Inventory Management
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Inventory management, also commonly known as inventory control, is the process that a business uses to balance its need to keep stock available with the costs of producing and storing it. So, for example, if a business produces a range of products that it sells on to consumers then it needs to have stock available to fulfil orders that come in. The aim of inventory management is to have just the right amount of stock available, not too much or too little.
The cost of manufacturing, buying and storing inventory can have a significant impact on the bottom line of a business. This is not an issue if the inventory it holds is regularly purchased. But, if a business has too much stock in storage compared to its sales then it will have spent out money on manufacturing, production and storage costs that it is not recouping in sales.
On the other hand having too little stock can also be damaging. A customer that cannot take delivery of a product when they order it may well not want to wait which could result in lost sales and opportunity costs. Inventory management systems simply work to help a business keep their stock at the most effective levels.
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